Wednesday, October 2, 2013

The Wall Between Mission and Endowment

What I want to talk about today is the whole question of the students petitioning universities to divest themselves of various stocks having to do with global warming, and specifically in the field of hydrocarbons. This movement has gained momentum and in many ways is heartening to see. Ultimately, I think it will fail -- and I think it will win.
 
 
 
Divestment will fail but the students will succeed
I don’t think divestment will happen on a large scale and – as I’m sure many of you know – I’m not a big supporter of divestment because the stock is then bought by people who don’t care and won’t act as responsible owners. I do think this movement will succeed in the long term. It is clear that this generation of students is serious about a future without dependence on hydrocarbons. They are studying the science and the policy to make that happen and they are raising the consciousness of younger and older Americans. It won’t happen overnight but, after meeting some of the students working on these issues, I believe change will come.
 
Why do I think divestment will fail? There are several underlying issues that will impact the campaigns at most universities. The first is that university administrators act as if there is a wall of separation between the endowment and the mission-driven part of the institution. You have on the one hand mission and on the other hand you have money. It is a compete conceit that these two issues can or should be separated. This is not church and state, though institutions act as if it were. Mission is supported by money, no doubt about it. But – and this is where things break down – the pursuit of support money is rarely impacted by the mission. Why is it that the people who educate the next generation of leaders don’t follow their own institution’s ethical ideals when raising funds? Isn’t this an ethical breakdown -- hypocrisy? How can ethics, governance or social justice be taught at an institution that ignores these issues when investing money? How can an institution expect to solve big world problems if it’s invested in companies that contribute to those problems? 
 
There is no justification for the position that mission is separate from endowments. These institutions are simply doing something that’s wrong. Can we simply espouse a point of view but then act counter to that view simply to make money. There’s no question but that there is a unitary nature between the mission and the endowment, and so the wall concept is just plainly wrong. 
 
The second issue that will undermine divestment is that undergraduates are at the college only four years, and after a student is up to speed on the issues they perhaps have two or three years of active involvement before they graduate. So, the university simply has to wait the students out. University administrations move at a glacial pace and can usually get by with occasionally responding to or meeting with students agitators before that group moves on and a new crop of students take over. So the university plays a waiting game while the main active stakeholders are racing the clock. 
 
And the wall between mission and endowment remains.
 
The wall between students and the university
So you have the university saying mission and endowment are separate and you have students are saying divest, divest, divest. In the end, they’re may not be speaking the same language but they’re talking about the same thing. Both are saying “I don’t want to address the underlying problem.”
 
-To the students I say, divestment may seem like an answer because then you’re no longer involved in a problem. But that doesn’t mean the problem doesn’t exist; it just isn’t solved by divestment.  Use your voices to stress ownership responsibility and put the burden for endowment securities on the administration. The values and philosophy they are teaching you should inform their investing policy. And, I hope you continue the fight to move beyond hydrocarbons. You’re 100% right to work for a better future and we need you to keep doing it. But a better future doesn’t come from walking away from problems. It comes from solving them.
 
-To the university I say, separating mission and endowment is unethical. You are either an organization that works for good or you are not. Ethics and governance cannot stop at the classroom door. The underlying values of an institution have to inform its investing and ownership policy. Face up to your responsibility, take advantage of the expertise in the academic side of your institution, develop learning on the subject of institutional responsibility for endowment assets, invite public criticism, invite student involvement. Be leaders in this – your example could change the world.
October 2, 2013 in ethics , endowment  |  0 comments  | 

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